In March, 50 well-known Chinese writers made an announcement against Baidu.com which provides a platform named Baidu Online Library for users to upload all kinds of literature including novels, business documents, professional memos and presentation slides. Uploading occurs without approval or authorization from the writers. The uploaded material may be read or downloaded by anyone without any fee. Nearly all famous writers can find their works in this online library, but they haven’t received any remuneration or commercial benefit from it.

After the writers made the announcement, China State Administration of Copyright called the management of Baidu.com and required them to remove those works without copyright license.
However, Baidu.com insisted they didn’t violate the copyright of writers. They argued that Baidu Online Library is merely a platform with all the works uploaded, read and downloaded by its users for free with Baidu not obtaining any profit from this process. Baidu representatives said they had in place a process to prevent piracy, under which infringing works would be removed if any person finds piracy and notifies Baidu.com. However this process has been under-utilised and ineffective.

With more and more people joining to condemn it, Baidu turned to negotiate with the writers, remove those works without license and apologize to the writers. This represents only a very partial win for authors. Affected authors do not receive any compensation for the previous unauthorised use of their works and they have no guarantee of increased protection against infringement in future.

Whether Baidu.com obtained benefit
From the facts described above, we may see that Baidu.com didn’t profit directly from the file sharing of literary works but Baidu draws profit from advertising click traffic and the Online Library brings a huge quantity of Intenet traffic to their site. So ultimately Baidu.com did profit from third parties’ piracy. This model may not be judged illegal according to current China law, but is widely regarded as improper because it causes loss to writers.

Loss caused by copyright violation
Copyright infringement of literature on the Internet is serious. Nearly all the novels of famous writers can be found online and downloaded freely. According to the CEO of Shengda Net (a website providing a platform for writers to upload their novels and allowing Internet users to read these novels for free or with certain charge), piracy costs writers an annual loss of at least of RMB 160 million. If this trends continues it will further erode writers’ incentive to create literature. This problem is already occurring in the music industry.

Internet users’ habits
The famous website Sina.com carried out a search among Internet users on “whether you agree to the writers’ action against Baidu.com”. 34% (10,690 persons) voted saying they think the writers’ action was against the spirit of Internet which should allow Internet users to read literary works for free. The availability of literature on the Internet has grown significantly over the past decade China. Many Internet users have become accustomed to being able to access works easily from the Internet without any charge and give little thought to authors’ rights.
In recent years, some operators including the Jinjiang Literature website started to charge on certain net literary works which are usually popular novels. The rate is 3 cents/1000 Chinese characters, usually excepting 30% or more of the overall work which is allowed to be read for free. For example, if one reads a novel of 300,000 Chinese characters and this novel may charges for 50% of content, the reader should pay RMB 4.5. This income is not fully paid to the writer, but shared by the writer and website operator. Though this rate is very low compared to the consumer price in China, most online literature users are still unwilling to pay when they have the option of accessing the same content for free elsewhere.

Liability of Baidu.com for pirated digital works
In China there are the Copyright Act, Regulations on Information Propagation through the Internet and the Tort Liability Act governing piracy and copyright infringement on the Internet. However, the laws adopt the principle of a safe harbor pursuant to the Digital Millennium Copyright Act. This means Baidu will not be held liable if it can prove it has fulfilled its obligation of due care and it didn’t know, or has no reason to know that pirated works were uploaded to the online library. Baidu.com successfully used this safe harbor principle in a case brought by 7 record labels in 2006. It would be very difficult for writers to succeed in a copyright infringement action against Baidu.

So too, it would be very difficult for writers to file cases against file sharers infringing their works. Gathering alleged infringers’ IP addresses and evidence on the infringements would not be a viable option currently in China. So it often happens that writers can do little to protect their copyright when they find their works freely shared without authorisation online.

Unfortunately it seems the literature and printing industries are in a similar situation to that first encountered by the music record industry a few years ago. It will require significant legal and cultural change to turn this trend around and better support the creative industries.